THE water company criticised for healthy profits despite high leakage rates is splashing out on big bonuses to keep top staff as it heads for sale or flotation, writes Tracey Boles.

Thames Water’s “retention and stability measures” are aimed at dozens of managers in “critical roles”. Its chief executive, Jeremy Pelczer, said: “The measures are being developed for two to three layers down in management.”

Executive bonuses are likely to put Thames under fire again for having Britain’s highest leakage rate. A third of its water is lost every day through leaks.

The one-off payments will be calculated as a large percentage of salary, and paid to qualifying staff who stay on after Thames Water has changed hands, probably next year.

It admitted last week that it had missed leakage targets set by the industry regulator Ofwat by 34m litres a day, raising the prospect of a £140m fine.

At the same time, it posted profits for 2005 up nearly a third to £347m. Later in the week it emerged that executives at Thames Water’s German parent RWE were paid a total of £20m last year.

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